As Spotify Technology SA brought on more premium service subscribers than expected, the company came out ahead of Q3 revenue expectations and posted a surprise profit. It had reportedly “outstripped” Apple Music in the race to dominate music streaming around the world, with its number of premium subscribers had grown by 26 million the past year to reach 113 million at September’s close, Reuters reported.
Spotify rolled out its offering more than 10 years ago, and, according to the report, has had the ability to overcome the resistance of some music artists as well as big record labels to help change how people consume music. And Hargreaves Lansdown analyst Nicholas Hyett noted per the report that “the fact that it’s delivering growth against an increasingly competitive backdrop is particularly impressive — especially when that competition is Amazon and Apple.”
The company forecast Q4 premium subscribers in a range from 120 million to 125 million. (The mid-point of that range was in line with analyst estimates of 122.6 million.) It forecasts its wider measure of monthly average users to increase to a range of 255 million and 270 million in the current quarter. (The average estimate of analysts is 259.7 million.)
Net income attributable to shareholders was $267.34 million in the third quarter or 36 cents per share. Analysts had forecasted a 29 cents per share loss. Revenue, by comparison, increased 28 percent to 1.73 billion euros for the three months that closed on Sept. 30. Analysts, by contrast, had forecast revenue of 1.72 billion euros.
The news comes as Sweden-based Spotify closed its second calendar quarter with 108 million paying subscribers worldwide and 232 million total monthly active users. Apple Music, however, had just more than 60 million subscribers per reports earlier this year. At the time it was noted that the music streaming service was looking to further grow its subscriber base by way of podcasts, having seen much growth after its February purchase of two podcast firms.
Apple Music was slightly ahead of Spotify in U.S. subscriptions, according to news at the time, with 28 million paid subscribers compared to Spotify’s 26 million as of February.